What is an Asset?

- It is often said by Bitcoin detractors that Bitcoin is an imaginary internet currency, literally Magical Internet Money

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• BItcoin is often said to not be a real asset because it doesn't produce anything and is not backed by an asset or credit. It can also be said, that unlike a mortgage or treasury certificate, Bitcoin isn't backed by collateral like a house, or the full faith and credit of the Government like a government Treasury Bond, so Bitcoin is worthless. It can be claimed that Bitcoin doesn't produce anything, and therefore unlike a stock ishare in a company, Bitcoin is worthless.
• So what is an asset?
  -According to Investopedia.com a popular financial knowlege website:

An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit.

What is Future Benefit?

• Most consider ROI or Return on Investment to be a Future Benefit by which assets should be measured for objective comparison.

So does BItcoin qualify?

• Well if you bought BItcoin for 1 dollar, 10 dollars, 100 Dollars, 1000 Dollars or even 10,000 dollars at some point in the past, Bitcoin is currently worth 40,000 dollars, so it could be said that Bitcoin has provide you a future Benefit.

And technically, it has a better ROI then Gold, Diamonds, Art, Stocks and Bonds in it's lifetime. Which are considered by most to be assets, because they are thought to be able to provide FUture Benefit, as defined as Return on Investment.

But is Bitcoin just an illustration of the Greater Fools Theory

• Some say Bitcoin is a perfect illustration of the greater fools theory, which said simple infers that only Fools buy Bitcoin, and do so in the hope of selling their Bitcoin later to people who are also Fools, but at a higher price, hence Greater Fools.
• Thats not the textbook definition, but instead my version of the short summary.
• So is Bitcoin bought by Fools, whose only hope of any meaningful Return on Investment is to sell it to others Fools at a higher price?
• I would answer this question, with a question, are the people buy Gold, Silver or Diamonds Fools because the only way they get a return on their investment, is to sell it to some other fool at a higher price?
• Does not this Greater Fools Theory thus include everyone who buys something at a price, hoping to sell it to another at a higher price?
• Or should we indulge ourselves and try to spli fine hairs by saying those assets have intrinsic value because they are real, whereas Bitcoin is ethereal, no real physical existence? But to that I would reply that Love, Affection, and Loyalty are Ethereal, they have no real physical form, but are they worthless because of that?

Last words...

• Personally, I think assets have both objective and subjective measures of value.
  Bitcoin can objectively be said to have a very high return on investment, and thus can be said to have value. And to those who say it only exists to be sold to someone else at a higher price, I would say that fact doesn't reduce the value of gold, silver or diamonds, so it shouldn't reduce the value of Bitcoin. Additionally, I would state that Bitcoin also has the additional value characteristic that you can use it for collateral for loans, so you can get money from your BItcoin without selling it, which is a characteristic of a very special class of assets, which are extremely valuable as they reduce taxes paid and in must societies this characteristic makes an asset more highly valued then other assets without this characteristic.
• So to those who feel that Bitcoin is a Worthless Magic Internet Money, and an example of the greater fools theory, I say to you that Bitcoin owners are laughing at you all the way to the bank, thinking that you are indeed the greater fool.

Posted Using InLeo Alpha

Posted Using InLeo Alpha

Posted Using InLeo Alpha